The Graham-Cassidy Legislation 2017

Proposed bill would impact practice of psychiatry and treatment of patients.

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On September 13, Senator Bill Cassidy of Louisiana and Senator Lindsey Graham of South Carolina released their version of legislation that would repeal and replace the Affordable Care Act (ACA) and make significant changes to the Medicaid program.

“Graham-Cassidy” leaves the Senate with only two weeks to pass this legislation under the current rules that would allow its passage with a simple 50-vote majority. The bill’s sponsors claim to have the support of 49 Senators. The nonpartisan Congressional Budget Office (CBO) has indicated that it cannot estimate the numbers of individuals in time, but many observers predict that Graham-Cassidy will lead to millions of Americans losing coverage make coverage more expensive for many more.

Graham-Cassidy contains numerous provisions that would have an impact on the practice of psychiatry and the treatment of individuals with serious mental illness and substance use disorders. They are summarized below:

  1. Block grants and Repeals ACA Insurance Subsidies
  2. Cuts Medicaid Expansion and Caps Medicaid Spending
  3. Expands Waivers of ACA Insurance Rules


Fundamentally alters the payment structure of the Medicaid program. Beginning in FY 2020, state Medicaid programs will be funded on a fixed per-beneficiary basis (i.e. per capita cap). Calculation of the cap would be tied to a faster-growing rate through 2024, followed by a slower-growing rate thereafter. Overall, this revised method of allocating federal Medicaid funding is projected to lead to significant cuts, leaving states to choose between keeping their existing programs (and bearing much more of the cost of these programs), cutting essential Medicaid services, and/or narrowing their Medicaid eligibility criteria.

Ends Medicaid expansion made available to states under the ACA. Any expanded eligibility for Medicaid would terminate by 2020. Graham-Cassidy also imports the optional “block grant” program for Medicaid outlined in the BCRA.

Individual Insurance Market

Repeals the premium assistance tax credits and other subsidies available to individuals under the ACA. Unlike prior versions of ACA repeal and replace legislation, Graham-Cassidy would terminate the various premium and cost-sharing assistance tax credits and subsidies available under the ACA. Instead, each state would receive a block grant with which it could assist individuals with purchasing insurance or covering any cost-sharing requirements. The method of calculating block grant funds under Graham-Cassidy would cause states with higher numbers of ACA marketplace enrollees to experience greater reductions in subsidies.

Repeals tax penalties for noncompliance with the individual mandate. Like the preceding ACA repeal and replace legislation, Graham-Cassidy will end the tax penalties for individuals who opt not to purchase insurance through the marketplace.

Expands the availability of catastrophic plans. Like the preceding ACA repeal and replace legislation, Graham-Cassidy will allow individuals of all ages to purchase so-called “catastrophic” plans that provide minimal coverage. Under the ACA, these were only available to younger enrollees.

Expands waivers of ACA insurance rules. Under the ACA, the Section 1332 waiver program was intended to let states experiment with different designs of their insurance markets—changing the structure of the subsidies, or requiring insurers to cover different benefits—within the law’s basic parameters. Provisions include:

  • Under the ACA, states can waive major ACA provisions related to pre-existing conditions, essential health benefits, actuarial value, out-of-pocket limits (for individual plans), other qualified health plan requirements, as well as its premium tax credit. These provisions can be waived if the State provides a description to how it would “provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment.”
  • Graham-Cassidy allows states to request that some, or all, of the block-grant funding for private insurance subsidies go toward implementing a Section 1332 waiver. Graham-Cassidy also allocates $2 billion in funding to help states prepare and submit Section 1332 waiver requests, and mandates that such requests be automatically approved 45 days after their submission. Under Graham-Cassidy, approved waivers can last up to eight years, and can be renewed for unlimited additional eight-year periods.

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